Direct, indirect and overhead costs of a construction site

Curious about how the direct, indirect and overhead costs of a job are distributed? This is a question many business owners ask when trying to estimate the total cost of a project. The good news is that there is an easy way to understand how these costs are distributed.
Table of contents

Direct costs

Direct costs are those costs that are directly associated with the work. These costs range from construction materials, such as bricks, cement, etc., to the equipment needed to carry out the work, such as scaffolding, tools, etc. Direct costs also include the wages of the workers performing the work.

Indirect costs 

Indirect costs are those that are not directly associated with the work, but are necessary for its execution. These include costs such as labor and third-party services, such as engineering, consulting, etc. Financial costs such as bank interest, property taxes, etc. are also considered.

3.General expenses

Overhead costs are those costs that are associated with the administration of a work, but are not directly related to the performance of a work. These expenses include production costs, storage costs, advertising costs, marketing costs, research and development costs, administration costs, insurance costs, rental costs and transportation costs. These costs are calculated based on the level of effort and time required to complete a job.

 Now that you have a better understanding of how the direct, indirect and overhead costs of a job are distributed, you can begin to better plan your projects. By knowing the costs involved, you can make informed decisions about resource allocation and cost estimating. This will help you save time and money when completing your project.

Discover these articles that will help you to make a construction estimate and how to do it on our Tribboo platform.

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Eva Degardin : January 25, 2023